Wild Blue Yonder

An Out-of-Work Gal Considers Her Opportunities

About Me

What began here as an online journal chronicling my progress as I pursued a variety of financial goals has morphed into a blog devoted to the concerns and challenges of the unemployed.

A communicator by profession, I cannot sit on my hands, even while temporarily out of work. What better subject to delve into than one I am personally experiencing, along with 15.4 million other Americans?

Personal finance issues and strategies for stretching a dollar will surely top the list, but I also plan to adopt a more holistic approach by taking on any aspect of the jobless experience that I think will be of interest to readers.

As always, I welcome your thoughts and feedback.

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“Fiscal fitness” can be a challenge, whether you have a steady paycheck or more erratic income. Maintaining financially sound personal finances requires discipline, stamina for the long run and an unwavering focus on what’s important.

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Archive for December, 2009

I was browsing Linked In this morning, scanning postings in various groups I belong to, including the Connecticut Job Openings group. There was a note posted several months ago that's still drawing replies, 907 at last count. It's an invitation to job-hunters to provide a brief profile of themselves, their geographic location and the kind of job they're seeking.

Confirming what we already know, the recession has stolen jobs from a widely diverse group of workers, from newly minted college grads to veterans of their industries, from those just trying to gain a leg hold that could somehow morph into a real career to senior-level managers hoping to replace a six-figure salary.

Here's a sampling of who's looking for work:

- An accounts payable specialist in central Florida
- An EMMY award-wining videographer from Denver
- A laboratory life scientist in Washington, D.C.
- A media consultant in Atlanta
- A senior construction manager in San Antonio
- A mechanical engineer in East Texas
- A trilingual paralegal in Atlanta
- An MBA student willing to relocate "anywhere in the world" for an entry-level management position
- A petrophysicist from Houston
- An interior designer from San Diego
- A medical salesman from the upper Midwest
- A finance manager in North Carolina
- A publications assistant seeking work in Washington, DC, Chicago or Seattle

For some, the status of American jobs is an abstract concept built around the latest unemployment figures. According to November data from the Bureau of Labor Statistics, Michigan's 14.7% unemployment is the highest in the nation, while North Dakota has the lowest unemployment at 4.1%.

In the Wall Street Journal's long-running Laid Off and Looking blog, highly educated MBAs cope with depression, remind themselves not to take their spouse's support for granted, wonder how to overcome job anxiety during the holidays and consider ways to bypass the enforced anonymity of the online job application.

A New York Times poll of 708 jobless individuals reported December 14 that:

* More than half of unemployed Americans have borrowed money from family or friends
* More than half cut back on healthcare because they were out of work
* Almost half suffered from depression or anxiety
* 55% suffered from insomnia
* Nearly half said their financial troubles were so severe they feared they would fall out of their social class
* 40% said they had moved or were thinking of moving to another part of the country to find a job
* More than two-thirds considered or are considering a career change

Chances are, you know at least one unemployed person, if not more. We know the job market will improve with time, but for some of those living in the present, their immediate prospects appear grim. So the next time you see a jobless person, give 'em a hug.

Unemployed workers may get an early holiday gift this year if the Senate votes its approval of the COBRA health insurance subsidy extension just approved by the House.

Without action, the 65% subsidy of COBRA health insurance would expire at the end of this year. By passing the extension of the subsidy for another six months, or 15 months in total, an estimated seven million jobless Americans could see their stress levels eased as the federal government picks up 65% of COBRA monthly premiums.

The COBRA subsidy was originally designed to last for up to nine months for the millions who lost their jobs in massive layoffs between September 1, 2008 and December 31, 2009 and who had an income of less than $145,000 for individuals or $290,000 for families.

Without the subsidy, COBRA coverage eats up 83% of the average unemployment check, pushing many families to drop health coverage altogether, according to Families USA, a consumer healthcare advocacy organization.

The imminent loss of the subsidy for many of the program's earliest recipients last month spurred Congress to scramble before their holiday recess. The subsidy meant that a $1,111 monthly premium for the average family became a more manageable $389 monthly premium, according to Families USA. (Here in Connecticut, I'm paying $173 a month as an individual.)

Even if you've already received the COBRA subsidy for the full nine months and have began paying the full cost of insurance, passage of the extension would mean you could retroactively restore the subsidy for the remainder of the 15-month period.

As Ron Pollack, executive director of Families USA, pointed out, the COBRA subsidy extension is simply a stop-gap measure. "Once health reform passes, this will no longer be a problem," he said, although even if some sort of health care reform is passed, it will not likely go into effect immediately.

The COBRA subsidy extension, which is part of a $636 billion Defense appropriations bill, would also enable workers laid off through February 2010 to be eligible for the subsidy. The Senate vote is expected tomorrow.

The COBRA subsidy is money well spent and a lifeline for many who are just a premium payment away from a healthcare disaster. While billions of taxpayer bailout money benefited car-makers, insurance giants and banks (many of which accepted TARP money even as they stepped up efforts to recoup lost profits from the sub-prime mortgage crisis on the backs of consumers, on the eve of new credit card reform), the COBRA subsidy is helping everyday Americans survive one of the deepest recessions this country has seen.

When your income is erratic (or even if it isn't), every household expense is subject to scrutiny, most particularly those recurring expenses that are too easily left on auto-pilot but really add up over time. Energy prices have been especially volatile during the past two heating seasons and for the majority of homeowners living in the Northeast, heating oil ranks among the top five expenses.

There's a great deal you can do to minimize your heating oil bill, from bulking up on insulation, winterizing around doors and windows and adapting to a cooler indoor environment.

Still, unless you're Paul Bunyan and rely solely on a fireplace or stove for heat, you're going to have to bite the bullet at some point to schedule a home oil delivery.

But before you dial 1-800-OIL-NOWW, there are still ways to economize. You can save a few bucks simply by shopping around each time you order fuel. Over the years, I've narrowed possible suppliers down to the three I know consistently offer the lowest prices. (If you've signed onto a contract that locks you into a set price for the entire winter season, that's another way to go, but it's also speculative and can backfire like it did last year when customers who signed fixed rate contracts last summer of over $4.50 a gallon got burned when prices began to slide in the fall. I stopped purchasing fuel in advance after the oil company I paid for an entire winter's worth of oil went out of business, but that's another story.)

When you shop around, be sure to ask the supplier if they offer a discount for paying in cash. (In my area, you can shave off another .06 per gallon by doing this.) I also make a point to fill up my tank in the peak of summer, when prices tend to be lower. This doesn't always guarantee a lower price, but with the exception of the 2008-2009 heating season, it usually works. And finally, when I have no choice but to order oil in the dead of winter, I try to wait for a relatively mild day to do so. The delivery man who came to my home today confirmed that doing so made sense and that prices do indeed dip with even a modest rise in temperatures. Most suppliers will honor the price they quoted you, even if prices are higher on the day when delivery takes place

During the past five winter seasons, I've tracked oil prices and usage in my own home. I've certainly noticed the ups and downs in prices. Looking at the five-year period from 2005-2006 to 2009-2010, my cheapest price paid for oil was in 2006-2007, when I averaged $2.14 a gallon. That must've been a relatively mild winter as well, because I used less fuel that year, 315 gallons, than any other year since then.

The last two heating seasons took the biggest chunk out of my wallet. I paid an average of $2.74 and $2.78 per gallon, respectively. Last week's national average residential heating oil price was $2.76 per gallon, according to the U.S. Energy Information Administration.

And while my total usage remained relatively constant in every other year, when I consumed in the 300-400 gallon range, I burned 506 gallons last winter. I can't remember, but it must've been a cold one. (The Residential Energy Consumption Survey reported in 1997 that households consumed an average of 730 gallons of heating oil each season. Hopefully, we have closed that gap since then, thanks to improved home energy efficiency.)

Averages, of course, don't tell the whole story. Checking back on a post I wrote last spring, I see that the lowest oil prices I paid in the past five years was $1.99 a gallon April 2008 (ah, those were the days) and the highest was $4.24 a gallon in June of 2008. Who would have guessed there'd be such a dramatic spike in just three months?

In today's hyper-connected world, it's not unusual for job-hunters to post their resume on multiple online venues, including job boards, like monster.com, as well as professional networking sites, like Linked In.

These days, finding a job may require you to cast a wide net and do everything you can to help prospective employers find you. But be prepared for some unwelcome attention when your online profile makes it easy for identity thieves and other scammers to approach you with often elaborate efforts to steal your money or good name.

I was reminded of these risks the other day as I scanned a full in-box of email and found a note from an unfamiliar name, "Keith Miller," at an outfit called UPC Limited.

"Keith" urged me to review his job description and fill out an interview form by clicking on the provided link. Oops! I nearly did so, but caught myself in time. Instead of clicking on that link, which could contain a virus or spyware, I Googled the company name. I came up with one dead link and a London clothing retailer using the UPC Limited name, but with the .com extension, not the .biz extension given in Keith's email. So I typed the URL provided in the email in my browser window and it brought me to a site whose business seemed to be helping sellers and buyers complete eBay transactions.

Reading the website copy provided a great deal of amusement, but more importantly, it underscored the need to be ever vigilant in protecting one's personal information from scammers. Follow these six tips to expose a bogus job lead or offer:

1. If the email or website language reads like a third-grader's best efforts, misspellings and bad grammar included, think twice before responding. Bad grammar and typos could be a sign the email was written by someone living outside the United States and for whom English is a second language. Some of the most prevalent Internet scams come from Southeast Asia, Eastern Europe and Nigeria, for example.

The tagline on the UPC Limited website read, "Solutions that you need, our best propositions for you, we work for your profit." In the About Us section, a photo of a smiling Kimberly Carroll is identified as "Sells manager."

If the email lacks specific details (for example, it states they found your resume on a job board without stating which one), it's more likely to be a generic form used over and over again. If you've truly caught the attention of a legitimate employer with a genuine interest in you, they will take the time to write you a personal note, not a form letter.

2. Consider whether the job offer is related to your most recent occupation, work background or expertise. In my own case, my posted resume clearly spelled out a long track record of work as a marketing writer. Why, then, would an employer encourage me to pursue a job as a "Financial Agent" whose primary responsibility was to "manage and process orders from customers?"

Payment-transfer schemes like this one abound in cyberspace. Such jobs involve accepting deposits into one's personal account and transferring payments as directed to other accounts, which are often overseas. The job offer is really a ruse used to fool job seekers into revealing their bank account numbers.

If the job has nothing to do with the kind of work you've done in the past, it's likely a scam. The so-called employer is less interested in finding qualified candidates and more interested in snaring large numbers of unemployed individuals, a few of whom may fall for the trick. Common sense also tells you that if you receive an emailed job offer from someone you didn't contact or interview with, something's amiss.

3. Beware of email requests for sensitive personal information such as bank account numbers, credit card numbers, Social Security numbers (SSN) or your driver's license. Legitimate employers won't ask for your SSN before an in-person interview and no job offer should depend on your willingness to accept direct deposit of your paychecks (unless you're applying for a federal government job).

In the UPC Limited case, the Financial Agent job description on their website included, "A bank account to process payments." A statement like that should be an immediate red flag.

Other suspect requests for information include questions about your marital status, height, weight or age. American employers don't ask those questions because they know they are barred from doing so by U.S. labor laws.

4. If at any point you're asked to pay a fee for a work permit or for any other reason, move on.

5. Use of free email accounts suggests a low-budget or fly-by-night operation. Question the legitimacy of any employer whose email includes MSN, AOL or Yahoo as part of the address. Yahoo, Gmail, Hotmail and many others all provide free email accounts which can be created and used by anyone. Legitimate businesses won't use these services.

6. Legitimate businesses are transparent. Reputable online businesses disclose their physical address, not just an email or PO box number. In the case of UPC Limited, a physical street address in San Antonio, Texas, was provided, but no such business was listed in the San Antonio yellow pages, nor does any street called "Voigt Drive" exist in that city.

Jobs are in short supply these days, but don't drop your guard to pursue a bogus offer.

It's been nearly three years since I started this blog. The approach of year's end has put me in the mood to reassess, evaluate and quantify. Today, 102 entries and 668 comments later, I can gauge which posts were most popular with readers, based on the number of comments.

Interestingly, my most popular posts included the launch of the annual No Heat Challenge and multiple updates and entreaties to throw on a sweater. All told, the 15+ posts on this topic averaged 11 comments each, while all other posts averaged just 5 comments.

Aside from the No Heat Challenge, could you guess which posts generated the most interest? No, they didn't address some aspect of personal finance, which is, after all, the predominant theme of this blog. Surprisingly, the most talked about posts, after the No Heat Challenge, had to do with my cats. My request for help in naming Luther (2/16/09) and later, Waldo (4/17/09), each elicited 20 comments each.

What can I deduce from these findings? First, that "Theo" and "Boris" are last on the list of preferred cat names in the minds of many. But more seriously, that matters of money management are perhaps more palatable, and a heck of a lot more fun to read about, when you can participate in personal challenges, quizzes or cat-naming contests to break up the stream of more weighty reading.

So that's what I'd like to strive for in 2010: the creation of more personal challenges that we can all participate in, and in the process of doing so, motivate ourselves and others to improve their financial picture in some way, big or small.

What kinds of challenges would you be up for joining? In my challenges I'd like to emphasize strategies to reduce spending, since the ongoing $20 Challenge already addresses saving money.

I'd love to track home energy efficiency, but with multiple variables (regional differences in energy prices and weather patterns, different types of energy used and varying home square footage ), it would seem a difficult thing to measure in a national challenge.

Shortly after Thanksgiving, the New York Times reported on the rapid rise of food stamp use across the country. Shockingly, there are 239 U.S. counties, from the Bronx to Appalachia, where at least a quarter of the population receives food stamps. In the cities of St. Louis, Memphis and New Orleans, the Times reported, fully half of all children receive food stamps. And it is in some of the nation's richest counties, like Forsyth County, Georgia and Orange County, California, where the use of food stamps is growing most quickly.

The spike in food stamp rolls has often followed industry busts, from the collapse of the recreational vehicle business in Elkhart County, Indiana to the slowdown in car parts manufacturing in northwest Ohio. In southwest Florida, food stamp use rose sharply along with high foreclosure rates.

One food bank volunteer quoted in the Times story was surprised to find that people seeking aid were "knowledgeable, normal, well-spoken, well-dressed. These are people I could be having lunch with."

The USDA's 2008 report on Household Food Security in the United States stated that 14.6% of American households were "food insecure" for at least part of the year, meaning that the diet of one or more family members was reduced or disrupted due to lack of money to buy food. This represents the highest rate of food insecurity since 1995, when such data was first collected.

In my home state of Connecticut, the Connecticut Food Bank notes that soup kitchens and food pantries it serves have reported an average 30% increase in demand for their services this year.

In my hometown, an affluent suburb in Fairfield County, Connecticut (population 26,000), there are not one, but two, food pantries which permit those in need to pick up groceries once a month. One of them is run by the Connecticut Food Bank, which expects to serve more than 300,000 residents this year. There is no income verification, unlike the federal food stamp program, where eligibility hinges on both income and savings. (I approached one of the food pantries, where I had volunteered several years prior, about volunteering once again when I lost my job last fall, but I was told they had all the volunteers they could use. The need for donations, of course, remains constant.)

Has hunger in your part of the world increased, decreased or remained about the same this past year? Have you ever participated in food stamp or food pantry programs and, if so, how much of an impact did it have on your family budget?

1. Embrace your inner predator.
When Waldo stalks The String, I have to admire the intensity of his concentration. In that moment when his eyes lock on their target, the outside world ceases to exist. There are no distractions. All energy is focused on his quarry. Every movement, every twitch of The String is processed and adjusted for as the animal prepares to pounce at exactly the right time. In a house cat, such single-minded attention comes from instinct and genes, but cultivated by a person, these qualities could enhance one's accomplishments where patience, commitment and clarity of mind are required.

2. Life is best savored from a lounging position.
Like good old boys who never tire of telling the same story over and over again, the Fur Boys repeatedly urge the following wisdom:

3. Always make time for play.
Waldo has the long legs and lean body of a ballet dancer. He'll readily go airborne to pursue a flung mouse. His twists, turns and pirouettes would earn him points from a television dance contest judge.

Luther has the body of a weight-lifter, strong, stocky and stout. He's not much of a jumper and is more inclined to look for a seat as soon as he enters a room. At play, he prefers to have The String dangled inches above him as he lies on his back, four paws to the wind. At all times, he maintains a perpetual state of innocent, wide-eyed adorableness, a fiction he frequently plays up to get himself out of trouble.

4. Lick your loved ones.

The expression of love can take several forms, Luther told me one day, feeling philosophical. Licking, for instance. Waldo's gentle snoring, Luther confided, awakens in him a fierce desire to show his love, and he does so by firmly placing his paws around his best bud's neck and vigorously bathing Waldo's head in a no-nonsense kind of way. Should Waldo have the temerity to protest or the poor judgment to move, the licks are replaced by jaws locked on the throat and a tussle ensues.

Leisurely sipping a glass of Zinfandel in the afternoon sun, Luther was feeling expansive and eager to articulate his feelings. To prove his love to me, his Keeper, he explained, he only needed to beam and squint in beatific joy and gratitude.

When feeling particularly demonstrative, Luther expresses his love by gently gnawing on delightfully odoriferous human toes, starting with the littlest and saving the biggest (and best) for last. He'll begin by artfully gaining the victim's trust with gentle, tender nipping that lulls one into complacency. Then, without warning, the delicate sampling of the 5 Little Piggies degenerates as the victim's toes are noshed on while Luther clamps down hard with a devilish grin on his face.

Are you better off now, financially speaking, than you were this time last year?

I pondered that question while I was answering a survey from the investment management firm that oversees a good chunk of my investable assets. It caused me to stop and think a while, because the answer was not clear-cut.

Investments

Speaking strictly in terms of investments, the rising stock market has buoyed my portfolio by 27% in just a year's time. (But what the stock market giveth, the stock market can easily take away.)

Earning Power

It's hard to overlook, however, the obvious elephant in the room; my present state of joblessness means I am most certainly worse off than I was this time last year.

Debt

Here's one more angle to look at: the balance on my only debt (my mortgage) has shrunk by about $9,000 in a year's time, helped along by sizable prepayments of principal until my layoff in September.

How do you measure your financial progress and where do you think you stand?

Being out of work can be a daunting experience that's mostly filled with anxious questions about how you're going to pay the mortgage and your many day-to-day expenses.

While the good things one can say about how unemployment affects your finances are few and far between, there is at least one positive scenario you should take advantage of if you've been out of work for more than a few months: a Roth IRA conversion.

For most investors, Roth IRAs have long been recognized as a preferable alternative to traditional IRAs, due to their tax treatment.

With a Roth IRA, you don't get a tax break when you make contributions, but after age 59 1/2, all your withdrawals, including accumulated earnings, can be taken tax-free.

In contrast, all or a part of your contributions to a traditional IRA may be tax deductible, which could lower your taxes. You will be taxed, however, on withdrawals, and your tax rate will vary according to what tax bracket you fall in at the time of withdrawal.

While you must take minimum distributions from a traditional IRA by age 70 1/2, there is no such requirement associated with Roth IRA withdrawals, making them an ideal tool not only for retirement, but for passing assets on to heirs.

Many workers believe their tax bracket upon retirement will be higher than in their earlier working years, making Roth IRA conversions an attractive option.

Yet the stumbling block for some has been the sizable tax bill that can often come due from such a conversion, since the amount converted is added to your income and is subject to tax.

That's why long-term unemployment or underemployment can make a Roth IRA conversion a much more doable event with a much less painful tax bite.

In my case, I was laid off in September 2009, so I will still have significant 2009 income to report when I do my taxes. But given the extraordinarily poor job market, it's conceivable I'll remain unemployed for much of 2010; what income I do earn, aside from unemployment benefits, may come from freelance writing or other temporary work assignments.

If that's the case, or for others who have already been out of work for much of 2009, this could be an ideal time to take advantage of your lower tax bracket during this time and convert your IRA to a Roth IRA. The conversion could cost you very little.

In my own case, I've been wanting to convert at least a portion of my traditional IRAs into Roth IRAs for some time, but the subsequent tax bill made me reluctant to do more than think about it. If my unemployment continues well into next year, however, my income will be abnormally low and I could fall into a lower tax bracket.

Remember when calculating your total income to include any unemployment benefits you may be receiving.

A Roth IRA conversion now might still make sense for you, even if you've only been out of work for a few months. If, for example, your salary when you were employed placed you close to the minimum income within any of the federal tax brackets. In a case like this, even a small reduction of income could bump you into a lower bracket.

Remember, you can only convert to a Roth IRA if your modified adjusted gross income is under $100,000 in 2009. And this limit on income disappears next year.

Consider such a tax-advantageous move only if you have adequate savings and won't hurt yourself by paying the IRA conversion tax bill. But then again, if your only income is unemployment benefits or sporadic, part-time work, the tax bill could be pretty manageable.

Please consult a certified finance planner or tax professional to determine whether a Roth IRA conversion is suitable for your needs.